Can stable coins solve cryptocurrency’s biggest problem?
People call cryptocurrencies currencies, but they are not really currencies — they are too volatile.
Stably recently visited Hanoi for the first time — coffee capital of Vietnam and where egg coffee originated. Aptly, TomoChain hosted a coffee talk event for our friends, along with Asia Blockchain Review.
Seattle based Stably is a venture-backed tech startup, solving the issue of cryptocurrency volatility.
Attendance was a mix of crypto enthusiasts, investors and students. A journalist and central banker also joined us.
Below are highlights from the conversation and cafe session. Questions were crowdsourced, and answers from the Stably team: Kory, CEO (who did a great job translating for himself in Vietnamese), and Mahraan Qadir, CMO.
Below are 4 highlights from the discussion:
- What is a stable coin?
- How can stable coins become a regular payment method?
- What is gas and why is using ERC20 tokens so complicated?
- How would Stably compete with State issued coins?
What is a stable coin? What values does it bring to cryptocurrency and the financial system
A stablecoin is simply, a cryptocurrency that holds a stable price.
Stable coins like StableUSD solve the problem of volatility, and is usually backed with something that is stable like USD.
There are two big problems with cash:
- Difficult to send overseas (especially in large sums)
- Difficult to divide up into many smaller fractions
You can easily do this with a stable coin. A stable coin can be transferred to anyone in the world within seconds or minutes, doesn’t require verification and is borderless. A stable coin can be divided into tiny portions — as small as a penny (or even smaller) for microtransactions.
All of these many advantages help stable coins act as money in the 21st century compared to traditional money.
How can stable coins become a regular payment method, or become more useful for everyday use
For cryptocurrencies to be widely accepted, there are two key factors.
People call people cryptocurrencies, but they are not really currencies — too volatile. The first thing we need is stability.
The second is good use cases. A lot of crypto projects have exciting ideas and visions but in reality, little has been delivered
With a stablecoin — use cases are plentiful. The use case for stablecoin is the same use case as money. We are confident stablecoins will gain adoption much faster compared to cryptocurrencies that aren’t stable.
Another important aspect is good user experience.
The power of blockchain is being able to send money really easily, but the user experience currently is bad. What is your public key and private key? Has the block confirmed yet? How much gas should I pay? For most people, a lot of this is overly complicated and technical.
The gold standard is the payment apps of today like Paypal and Venmo.
Stably is working on achieving that level of ease of use, but with blockchain powering it in the backend, then this is very powerful
What is Gas? How does TomoChain’s
A slightly more complicated concept is gas and gas fees — gas is the execution fee for every operation made on Ethereum. If you want to use any ERC20 token, the fact that you need to also own Etherum (to pay gas fees) can be confusing.
To solve this problem, TomoChain is developing a new feature named Fee by Token Protocol. Long Vuong, CEO of TomoChain shared a little about the release for later this year, it is an innovative concept where the fee is paid directly from the token.
For example, Stably can issue a stable coin named TOMOUSD (on the TomoChain blockchain), and it can be used directly for payments without having to also own TOMO. This provides a much better user experience compared to Etherum currently and is an important use case for businesses with many users, without the need to educate on the complicated backend details of blockchain.
How would Stably compete with State issued coins?
We don’t see it so much as competing. How can you compete with a national stable coin? (you can’t).
Right now, there are no State issued stable coins. We are doing what the central banks and governments should be doing.
The way we see it is, when central banks and governments start issuing state-backed stable coins, this is when the industry will evolve to the next step. Perhaps at that time, the reserve will no longer be dollars, but nationally issued stable coins, and then we get to build additional utility and layers on top of it.
We don’t see it as a threat. If a government starts to issue a stable coin, that further confirms our thesis that stable coins are the future. If this does happen — we can pivot, adapt quickly, and take advantage of the evolving financial landscape and new opportunities.
For example, Facebook. A large and credible organisation. When the news came out that they were working on a cryptocurrency and it is likely that it will be a stable coin - we were ecstatic! Because here it is — one of the biggest tech companies in Silicon Valley sees the potential of stable coins.
We think there will be hundreds if not thousands of stable coins in the future. You will look into your digital wallet and you might see Stably, you might see TrueUSD, you might even see Facebook Coin or Government coins.
The future will be very exciting.
The full live feed
You can see the full live stream here — discussion starts at 9:51.
Stably
Stably is building a more efficient global economy — faster, cheaper, and accessible to all — through USDS, a regulated stablecoin.
Learn more at www.stably.io
TomoChain
TomoChain is an award-winning, Blockchain technology solutions provider.
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